FASB introduced a project Wednesday that is intended to make financial statement disclosures more useful, organized and consistent, and less redundant.
The project will focus on developing a framework for improved GAAP disclosures, according to FASB Chairman Robert Herz. The vision for the framework is for it to allow companies and other entities to focus on making more coherent disclosures in their annual reporting package, move away from what some assert has become a compliance exercise and perhaps facilitate XBRL electronic tagging of information.
“Many constituents have expressed concerns about disclosure overload,” Herz said in a press release, which cited recommendations from the Investors Technical Advisory Committee and the SEC Advisory Committee on Improvements to Financial Reporting, among others.
“While clear and robust disclosures are essential to informative and transparent financial reporting, improving the way such disclosures are integrated can help decrease complexity,” Herz said. “(This) framework will enable companies to communicate more effectively with investors and also help eliminate redundancy or otherwise outdated GAAP disclosure requirements.”
The project will evaluate and address whether the disclosure framework should:
- Apply to all entities or exclude private or nonprofit entities
- Apply to interim reporting
- Focus only on high-level principles
- Focus only on notes to financial statements or extend to ways to better integrate information provided in financial statements, MD&A and other parts of a company’s public reporting package.
FASB expects to begin deliberations this quarter and to issue a preliminary views document in the first half of 2010.
Herz is expected to be among the speakers July 17 at a Global Accounting Alliance roundtable on complexity in financial reporting hosted by the AICPA at the Institute’s New York office.